Blowing our minds over school taxes chapter 1

Hey there, time traveller!This article was published 7/1/2014 (1318 days ago), so information in it may no longer be current.

It’s a given that Tory leader Brian Pallister and taxpayers federation head Colin Craig will have a total hissy fit when Education Minister James Allum announces public education funding around the end of January.

Trustees prez Floyd Martens and teachers union boss Paul Olson will do pretty much the same thing, claiming as always that it’s not enough, but they’ll be really, really polite about it.

Understanding what it will mean to your tax bill — good luck with that.

Unless you’re one of the 11 or so earthlings who understands Higgs boson, you probably won’t be able to figure out your taxes until your tax bill arrives in the mail.

And I won’t either, which won’t stop me from consuming a gazillion kilobytes of cyberspace writing about this until school boards turn in their mill rates March 15.

As my colleague Bartley Kives just confirmed for me, this is a provincial reassessment year.

I’ve previously blogged umpteen times, that while everyone goes squirrelly over education property taxes, it’s the system’s being based on the assessed value of properties that’s the key to the complex, convoluted, confounding, and confusing public education financial situation.

Every two years, the province reassesses the values of all properties across Manitoba. How that’s done, we’ll leave that for another day, else your brain will hurt too much to try to handle today’s point, assuming it turns out that I have one to make.

Pause while I sort out what I’m trying to do here.

OK, every property has a new assessed value, and the vast majority will increase in value.

Why is this pertinent?

Well, remembering back to the 89 times I’ve tried to explain mill rates, you multiply the mill rate by the portioned assessed value of your property (portioning, alas, will await yet another day), do some multiplying and dividing, and you get your tax bill.

The mill rate is determined by taking the school division’s assessment base (likely a figure in the tens or hundreds of millions of dollars), and dividing it into the amount of money the trustees want to raise through local education taxes, and then fiddling with decimal points.

One way that taxes can increase is if the trustees want to spend more than they did last year — no, stop giggling, we’re being serious here.

That increase might be in the range of four or five per cent in recent years.

So, the amount of money in the process I talked about three paragraphs ago — for those of you still with me, if any — gets a bit bigger.

But the assessment base gets a whole lot bigger.

And it thus becomes irrelevant to compare mill rates year to year, because the mill rate will almost certainly drop.

Let’s get overly simplistic, and say that last year the assessment base was 80, and the amount of taxes to be collected was 10. This year, the trustees want to collect 10.5, but the number by which that’s divided, the much larger assessment base, is now 100.

You do understand that 10.5/100 is a smaller number than 10/80, don’t you? Professors Stokke and Craigen, do we need an intervention here?

But wait, there’s more.

Maybe the assessment base in your school division has increased by 16 per cent. You still have to look at the change to the assessed value of your own individual property, and try not to scream when you realize that residential values are up by an average of 22 per cent but commercial values only 12 per cent, and they’re portioned at different rates....

Wait, that’ll be three or four blogs down the road.

Let’s go back to the assessment base’s going up 16 per cent in your division. If your house goes up 16 per cent, then nothing much has changed, you’re carrying the same share of funding the system that you did a year ago, and your tax bill will go up roughly by the same percentage increase as the amount of taxes levied.

But if your house has increased in value by 11 per cent, your taxes will increase by less than that homeowner who’s at 16 per cent; if your home goes up by 23 per cent in value, while that may be good news for resale, your taxes will rise at a higher rate than for that 16 per cent homeowner.

Easy to understand, eh?

We’ll wait for another day to talk about how changes in the commercial assessment base will also affect how much your home’s education property taxes change.

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